Problem:
Yoshihara Corporation produces a single product and has the following cost structure:
Number of units produced each year 5,700
Variable costs per unit:
Direct materials $70
Direct labor $63
Variable manufacturing overhead $8
Variable selling and administrative expense $8
Fixed costs per year:
Fixed manufacturing overhead $273,600
Fixed selling and administrative expense $119,700
The absorption costing unit product cost is:
a.$197
b.$141
c.$189
d.$157
2. Harris Company produces a single product. Last year, Harris manufactured 17,700 units and sold 13,700 units. Production costs for the year were as follows:
Direct materials $159,300
Direct labor $100,890
Variable manufacturing overhead $221,250
Fixed manufacturing overhead $277,890
Sales were $813,780 for the year, variable selling and administrative expenses were $98,640, and fixed selling and administrative expenses were $178,770. There was no beginning inventory. Assume that direct labor is a variable cost.
The contribution margin per unit was:
a.$23.37
b.$14.9
c.$25
d.$32.2